Cahrles D. Bonanno Linen Service, Inc.

National Labor Relations Board - Board Decisions

Aug 6, 1979

243 N.L.R.B. 1093 (N.L.R.B. 1979)

('HARI.ES ). BONANNO IINEN SRVIC'F. IN('.
Charles D. Bonanno Linen Service, Inc. and Team-
sters Local Union No. 25, International Brother-
hood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America. Case I-CA 11628
August 6, 1979
SUPPLEMENTAL DECISION AND ORDER
On May 12, 1977, the National Labor Relations
Board issued its Decision and Order in the above-
entitled proceeding,' finding that Respondent vio-
lated Section 8(a)(5) and (1) of the Act by refusing to
execute a collective-bargaining agreement reached
between Teamsters Local No. 25 (the Union) and the
New England Linen Supply Association (the group).2
In so finding, the Board adopted the Administrative
Law Judge's Decision in which he found that Re-
spondent's untimely withdrawal from the multiem-
ployer group was not justified. The Administrative
Law Judge relied on Hi-Wav Billhoards. Inc., in
holding that the existence of a bargaining impasse is
not an "unusual circumstance" within the meaning of
Retail Associates, Inc.4 He specifically noted that four
courts of appeal had rejected the Board's position
that a bargaining impasse does not constitute such an
unusual circumstance as to justify an employer's uni-
lateral withdrawal from group bargaining. The Ad-
ministrative Law Judge concluded, however, that he
was bound by the Hi-Wall Billboards rule of the
Board.
In light of the holdings of the several courts of ap-
peal5 which have formulated an "impasse doctrine"
1229 NLRB 629 (1977).
2 Respondent is in the business of laundering and renting uniforms and
linens. It has been a member of the group which has negotiated with the
Union for several years. Before the last contract expired in April 1975. nego-
tiations were duly opened for a new agreement and Respondent authorized
the group to bargain in its behalf. Respondent participated In the ncgotia-
lions. Impasse was reached in May 1975 over whether the employees would
be paid on a commission basis or remain on wages. Thereafter, in June 1975.
the Union called a selective strike against Respondent, and most of the
group responded by locking out their employees. After some 5 months dur-
ing which the situation remained static, with all efforts to break the impasse
failing. Respondent withdrew from the group. The remaining group mem-
bers then terminated the lockout and negotiations resumed with Respondent
absent. In Apnl 1976. when the Union dropped its demand for compensa-
tion by commission, an agreement was reached. The Union thereafter in-
formed Respondent that it had not consented to the withdrawal and thus
considered Respondent bound by the terms of the agreement reached with
the group. Respondent denied that it was bound and refused to execute the
agreement.
206 NLRB 22 (1973).
' 120 NLRB 388 (1958).,
N.LR.B. v. Beck Engraving Co., Inc., 522 F2d 475 (3d Cir. 19751:
N.L.R.B. v. Associated Shower Door Co.. Inc.. et al. 512 F.2d 230 (9th Cir.
1975): N.L.R.B. v. Hi-Way Billboards, Inc. 500 F.2d 181 (5th Cir. 1974); and
Fairmont Foods Company v. N.L.R B. 471 F2d 1170 (8th Cir. 1972). Since
the May 1977 Decision and Order in the instant case. the Second Circuit has
joined its "sister Circuits" in holding that an impasse will justify a party's
unilateral withdrawal from multiemployer units. N. L R.B v. Independent As-
sociation ofSteel Fabricators, Inc., 582 F.2d 135 2d Cir 1978)
enabling an employer to withdraw unilaterallb frol a
multiemployer bargaining unit, the Board, sua sponle.
has decided to reconsider the instant case. For rea-
sons to he set forth below we have concluded that this
case was correctly decided and we hereby affirm our
conclusion that the Respondent violated Section
8(a)(5) and (I) of the Act by refusing to execute the
contract reached between the Union and the group
which represented Respondent.
The basic rules governing withdrawal from mul-
tiemployer bargaining associations were set fi)rth in
Retail Associates. Absent mutual consent" or unusual
circumstances, neither an employer nor a union may
withdraw except upon unequivocal written notice
prior to the date set by the contract for modification
or the agreed-upon date to begin multiemployer ne-
gotiations. The Board has since held that these rules
are to be applied equally to both employers and
unions.' With respect to partial withdrawal, a union
may., upon timely notice, consent to an individual em-
ployer's withdrawal and continue multiemployer bar-
gaining unless the remaining employers exercise. in a
timel' fashion, their right to withdraw from the frag-
mented unit.8
For withdrawals after negotiations have begun, the
Board has limited the "unusual circumstance" excep-
tion to cases in which "the very existence of an em-
ployer as a viable business entity has ceased or is
about to cease"9 and to cases where consensual em-
ployer withdrawals through separate bargaining have
so depleted a unit that it would be "unfair and harm-
ful to the collective-bargaining process" not to permit
one or more of the remaining employers to with-
draw.'"
As to whether a bargaining impasse alone is suffi-
cient to warrant withdrawal, our position, which we
now reaffirm, is set forth in Hi-Wav Billboards, supra.
We there held that there is nothing so extreme about
impasse as to make it an unusual circumstance which
is destructive of group bargaining. An impasse is only
a temporary "deadlock" or "hiatus" in negotiations
which in almost all cases is eventually broken.
While the group's position on Respondent's withdrawal s not at issue n
this proceeding. an employer who wishes to perfect an untimely withdrawal
must secure the consent of both the union and the multiemployer assoclation
of which it has been a member. See Teamsters Union Local No 78 OlIvmpia
Automobile Dealers Association), 243 NLRB 1086 (1979). Member Murphy
was not a signator) to the Olympia Automohile Dealers A4ssciation decision
and, in any event. does not find it applicable or relevanl to the issue now
before the Board.
The Evening ,Ses Association. etc. 154 NLRB 1494 (1965)
Pacific Coast Association of Pulp and Paper anufarturers, 163 NLRB
892 (1967).
9 Hi- WaV Billboards. Inc, supra at 23
'o Connell Tpesetting Compan, et al, 212 NLRB 918. 921 1974)
243 NLRB No. 140
1 93
I)t('IS()IONS ()1- NA I()NAI. I.ABOR RELATIONS BOARI)
through either a change of mind or the application of
economic force. Indeed, an impasse may he brought
about intentionally by one or both parties as a device
to further, rather than destroy, the bargaining pro-
cess. Suspension of the process as a result of an im-
passe may provide time fbr reflection and a cooling of
tempers: it may be used to demonstrate the depth of a
party's commitment to a position taken in the bar-
gaining: or it may increase economic pressure on one
or both sides, and thus increase the desire for agree-
ment. For example, impasse permits the employer to
place into effect those wage increases or benefits it has
theretofore offered, an action (or the possibility of it)
which may substantially shift the bargaining positions
of the parties. In these and other possible uses of im-
passe as a bargaining tactic, the emphasis is toward
achieving agreement rather than causing a permanent
disruption of the relation. And much the same may
be true even of impasses which arrive without being
intended by either side. Consequently, there is little
warrant for regarding an impasse as a rupture of the
bargaining relation which leaves the parties free to go
their own ways. For these reasons, we hold that it
would not effectuate the policies of the Act to permit
an employer to withdraw from a multiemployer unit
solely because a bargaining impasse has been
reached.
The courts of appeal that have rejected this posi-
tion have not, in our view, focused exclusively on the
impact of impasse on the collective-bargaining pro-
cess. We suggest that the courts have seized on the
impasse concept as a means of addressing two other
important problems that can arise in the multiem-
ployer context: namely, unit fragmentation and im-
balances in relative bargaining strength."'' After re-
viewing the court decisions in question, we shall
synthesize our views on union and employer obliga-
tions at impasse. We shall treat, in particular, the im-
pact of interim agreements following impasse on mul-
tiemployer bargaining dynamics.
If
In Fairmont Foods Company, supra, the court ex-
cused an employer's withdrawal from a multiem-
ployer bargaining unit after negotiations had begun
but before an agreement had been reached.'2 Addi-
tionally, the court found evidence of union consent to
Fairmont's withdrawal in the fact that the union was
willing to negotiate during impasse with other associ-
1 For a scholarly recognition and discussion of this point, see Murphy,
"Impasse and the Duty To Bargain in Good Faith." 39 U. of Pittsburgh L.
Rev. I, at pp. 50 60 (1977).
2 The court relied on Morand Brothers Beverage Co., et al.l, 91 NLRB 409
(1950), enfd. 190 F.2d 576 (7th Cir. 1951). The Board's holding in this case
predated Retail Associares, supra, and is no longer valid.
ation members. It was "particularly incongruous."
the court suggested, that the Board had not found
acquiescence in the withdrawal in light of interim
agreements, intended to be merged later into the asso-
ciationwide agreement, between the union and three
other employers.
The Fifth Circuit, in Hi-Way Billboar.d, Inc., s-
pra, accepted the Board's reasoning on the impact of
impasse only insofar as our decision protected the in-
terests of the union and of the employees in the mul-
tiemployer unit. The court expressed doubts, how-
ever, as to the "fairness" of the Board's policy of not
permitting unilateral employer withdrawal at im-
passe. The court relied on Pacifi Coast Associates,
supra, in finding Board support for a union's with-
drawing with respect to some employers while it con-
tinues a multiemployer relationship with a now de-
pleted association." The Fifth Circuit disapproved,
on equitable grounds, of the Board-sanctioned oppor-
tunity, taken in Hi-Way Billboards, Inc., for a union
to reach interim agreements with some employers and
then to whipsaw those employers remaining in the
association.
The third court to consider withdrawal rights at
impasse was the Ninth Circuit in Associated Shower
Door Co., Inc., supra.'4 The court, fobllowing the Fifth
and Eighth Circuits, relied on Pacific oast and The
Evening News Association, supra, as to equality of
withdrawal rights, and reasoned that (at 512 F.2d at
232):
[lit seems only fair that, when an impasse is
reached and a union then engages in selective
picketing and enters into substantial individual
agreements with employers who had been mem-
bers of the multiemployer unit, the withdrawal
of the remaining members of the unit, if un-
equivocally communicated, should be permitted.
Otherwise, the court stated the union could sign indi-
vidual agreements with some employers and then
subject the remaining members of the "significantly
fragmented and weakened multiemployer unit" to
whipsawing. The court thus designed a fairness ratio-
nale which viewed the Board as having violated its
own policy of preserving the equality of withdrawal
rights in multiemployer situations.
u With all due respect, we note that the court misread Paci'w Coast. As
indicated. supra, we allowed union withdrawal in that case because timely
notice was given prior to the start of negotiations. Pacific (as would not in
any case lead to whipsawing, since we also held that individual employers
are also free to withdraw prior to negotiations.
4 After impasse. the union signed interim agreements with several mem-
bers of the association after those members had sought out the union, re-
questing separate settlements based on the union's last offer. The union
agreed and included "most favored nation" clauses in the separate agree-
ments. When the association finally settled with the union it got less favor-
able terms than the employer-members who had signed the separate agree-
ments.
1094
CHARLES D. BONANNO LINEN SERVICE, INC.
In Beck Engraving Co., supra, the Third Circuit
found that an impasse reached in multiemployer bar-
gaining constituted an unusual circumstance under
Retail Associates and thus justified the respondent's
unilateral withdrawal. 5 The court's analysis did not
directly confront the Board's Hi-Way Billboards ra-
tionale. The Third Circuit agreed with the Shower
Door decision that the Board has, in its post-Retail
Associates decisions, deviated from its policy of ap-
plying its rules in an even-handed manner. Since the
Board has approved a union's negotiation of interim
agreements with individual members of a multiem-
ployer group, 6 we have, according to the court, effec-
tively given permission to unions to whipsaw those
employers who do not sign such agreements.
The Beck court stated that allowing interim agree-
ments strengthens a union's hand vis-a-vis the em-
ployers who continue to bargain within the unit. This
it found tantamount to a rejection of the existence of
the multiemployer unit since it is inconsistent to say
that the union and some employers may act on an
individual basis while other employers in the same
unit, relegated to this position by the union's refusal
to negotiate with them on an individual basis, must
adhere to group bargaining. The court concluded that
the Board's approval of individual interim agree-
ments during multiemployer bargaining and without
requiring withdrawal from the multiemployer unit is
sufficient cause for according the remaining employ-
ers an equivalent right-unilateral withdrawal after
impasse.'7
The court rejected the Board's contention that
since the union did not attempt to negotiate interim
agreements the above rationale would not apply. It
held that the employer's right to withdraw unilater-
ally cannot be made contingent on the union's exer-
cise of its concomitant right. The court held that, if
they are equal rights, they should accrue simulta-
Is When a bargaining impasse was reached dunng negotiations for a new
contract, the union began a selective strike. Then the union, the association,
and an individual employer agreed to that employer's withdrawal from the
unit. Thereafter, more employers were struck. The respondent's employees
withdrew from the union and returned to work and the respondent then
announced its withdrawal from the association. Shortly thereafter the union
and the association reached agreement on a new contract which the respon-
dent then refused to sign.
" Plumbers and Steamfitters Union No. 323 (P.H.C. Mechanical Contrac-
tors), 191 NLRB 592 (1971), and Sangamo Construction Company, 188
NLRB 159 (1971).
IThe court employed a balancing test with respect to what it termed
"economic weapons," taking its cue from N.L.R.B. v. Truck Drivers Local
Union No. 449, International Brotherhood of Teamsters. Chauffeurs, Ware-
housemen and Helpers of America, A.FL. [Buffalo Linen Supply Co.]., 353
U.S. 87 (1957). There the Supreme Court held that nonstruck members of a
multiemployer bargaining unit could utilize a general lockout as a defense to
a selective strike. Since the Third Circuit asserts that in P.H C. Mechanical
Contractors and Sangamo, supra, the Board has sanctioned a "second"
weapon for a union in addition to the selective strike. this resulting new
imbalance requires the grant of a corresponding "second" weapon for each
employer in a multiemployer unit.
neously based upon the occurrence of an event which
neither party can manipulate, i.e., impasse. Other-
wise, stated the court, the party whose right accrues
first would have a "tremendous bargaining advantage
and leverage."
After acknowledging that its ruling would add to
the instability of group bargaining, contrary to what
the Retail Associates rules sought to accomplish, the
court nevertheless found that the interest in preserv-
ing the balance of power in multiemployer bargaining
outweighs the loss of stability. The court went on to
suggest that if the Board were to "return" to the Re-
tail Associates rules by disapproving of individual in-
terim agreements the courts might well respond by
disallowing unilateral withdrawal by employers after
impasse."8
Ill
The foregoing summary reveals, in our view, a his-
tory of judicial reluctance to deal directly with the
Board's approach to the impact of a bargaining im-
passe on multiemployer negotiations. Our concern
has been with the dynamics of impasse, the potential
for renewed unitwide bargaining, and thus with the
stability of multiemployer units. The courts have fo-
cused on the Board's approval of individual interim
agreements or substantial agreements having been en-
tered into, and viewed the result as contrary to the
principle of even-handed application of Board rules
for withdrawal from multiemployer units. Further,
the Board's "departure," in the words of the Beck
court, from Retail Associates and its progeny has dis-
turbed a balance of economic weapons between a
union and the employer-members of a multiemployer
unit. The courts have responded by creating an equi-
table impasse doctrine designed to redress the as-
serted imbalance by finding that impasse or impasse
plus interim agreements or "substantial" agreements
as in Associated Shower Door constitutes an unusual
circumstance sufficient to justify unilateral with-
drawal by an employer.
We respectfully disagree with the Third Circuit's
characterization of a bargaining impasse as an occur-
rence which neither party can manipulate. We reaf-
firm our belief that "[i]n the overall ongoing process
of collective bargaining [impasse] is merely a point at
which the parties cease to negotiate and often resort
to forms of economic persuasion to establish the pri-
macy of their negotiating position."'9 The Board is of
the view, for the reasons set forth below, that we ful-
fill our statutory obligation to promote effective col-
lective bargaining by permitting a union to negotiate,
I" N.L R.B. v. Beck Engraving Co. 522 F.2d at 484
g H-l'av Billboards, Inc. 206 NLRB at 23.
1095
I)ECISIONS OF NATIONAL LABOR RELATIONS BOARD
after impasse, true interim agreements with individ-
ual members of a multiemployer unit without thereby
creating new withdrawal rights in the remaining em-
ployers.
Since all the courts have stressed the importance of
postimpasse agreements between the union and indi-
vidual employer-members of a multiemployer unit, it
is vital to understand what kinds of agreements the
Board has approved. In Sangamo, supra, the interim
agreement continued the recently expired contract
until a new associationwide contract was negotiated,
at which time the employer was to adopt its terms
and conditions and grant any wage increases retroac-
tively. The Board, in dismissing charges that the em-
ployer and the union, respectively, violated Sections
8(a)(5) and 8(b)(3), held that the interim agreement
had no significantly adverse impact on the integrity of
the multiemployer unit. The agreement did not dero-
gate the unit's bargaining authority nor did it place
the early signer outside the coverage of the ultimate
associationwide contract. In P.H.C. Mechanical Con-
tractors, supra, the interim agreement contained the
same terms that had been offered to and rejected by
the association. As in Sangamo, the early signer was
bound to become a party to the eventual unit con-
tract. Thus, in both cases, since the early signers
maintained a vested interest in the outcome of final
union-association negotiations, the multiemployer
unit was neither fragmented nor significantly weak-
ened.
We distinguish, in the multiemployer bargaining
context, between interim agreements which contem-
plate adherence to a final unitwide contract and are
thus not antithetical to group bargaining and individ-
ual agreements which are clearly inconsistent with,
and destructive of, group bargaining.
An example of the latter type of agreement is
found in Typographic Service Co.20 A panel majority,
Chairman Fanning dissenting on the facts, there held
that employer-members of a multiemployer bargain-
ing unit did not violate Section 8(a)(5) by unilaterally
withdrawing after impasse and the negotiation of
separate contracts with several other employer-mem-
bers.2 t The Board found that the union's conduct "ef-
2°238 NLRB 1565 (1978).
21 After a bargaining impasse, all employer-members placed into effect
their last proposal. The following day the union struck all 17 employers. The
union then offered to end the strke against any employer who would rein-
state the terms of the expired contract which provided for continuation of its
terms until new terms were agreed upon, Seven employers accepted this
offer. The union then offered one of these employers a choice between ex-
ecuting a contract based on an eventual associationwide contract or an
agreement based on union contracts with employers, not members, of the
unit. A second employer-member received a union offer to sign one of two
contract proposals, both of which differed from the association's proposals.
At this point the 10 employer-members who did not sign the interim agree-
ments announced their withdrawal.
fectively fragmented and destroyed the integrity of
the bargaining unit" and thus fell within the "unusual
circumstances" exception of Retail Associates. The
union offered to conclude its "interim" agreements
with final agreements which differed not only from
each other but also from proposals made during the
preimpasse bargaining stage. Further, acceptance of
the final offers made to individual employer-members
would have rendered impossible a final agreement
binding on all unit members. 2 2
An interim agreement is thus appropriate to the
extent it facilitates the breaking of impasse and the
resumption of unitwide collective bargaining with all
employers maintaining an equivalent stake in the fi-
nal outcome. As in Sangarno and P.H.C. Mechanical
Contractors, and unlike Typographic Service Co., such
an agreement is one which establishes terms and con-
ditions of employment for one or more employer-
members pending the outcome of renewed group bar-
gaining. Any resulting group agreement would then
apply to all employers, including each signer of an
interim agreement. Acceptance of this commitment
will preclude a finding that the early signers had with-
drawn from the unit. We disagree with the courts who
have viewed such temporary economic pressure on
remaining group members as inconsistent with the
concept of multiemployer bargaining units or with
the Board's rules based on Retail A.ssociates and its
progeny.
With all due respect to the Third Circuit we dis-
agree with its analysis of what factors are to be bal-
anced in the multiemplover bargaining context and
its conclusion as to how that balance is to be struck.
Beginning with the Supreme Court's admonition that
the Act does not constitute the Board as an "arbiter
of the sort of economic weapons the parties can use in
seeking to gain acceptance of their bargaining de-
mands,"2 3 we reemphasize that, absent proof of un-
lawful motivation, parties have great leeway in exert-
ing concurrent economic pressure on each other. As
summarized in our Hi-Way Billboards decision, fol-
lowing a genuine impasse the union can call for a
strike; the employer can engage in a lockout, make
unilateral changes in working conditions if they are
consistent with the offers the union has rejected, or
hire replacements to counter the loss of striking em-
22 Chairman Fanning notes that neither of these separate contracts was
entered into. The "negotiation" his colleagues refer to could accurately be
characterized as an exploratory tactic calculated to get the parties back to
multiemployer bargaining, in effect an appropnate "dynamic" of impasse.
21 N.L.R.B. v. Insurance Agent's International L'nion. AFL CIO Pruden-
tial Insurance Cao. 361 U.S. 477. 497 (1960):
IT]he use of economic pressure by the parties to a labor dispute is not a
grudging exception to some policy of completely academic discussion
enjoined by the Act: it is part and parcel of the process of collective
bargaining.
1096
CHARLES D. BONANNO LINEN SERVICE, INC.
ployees. 2 4 The Beck court, choosing to focus on only
some of these options, granted withdrawal rights to
employers in response to what it perceived as a two-
to-one "weapons" imbalance in favor of the Union.2
However, the Board's statutory mandate is to bal-
ance not economic weapons, but "conflicting legiti-
mate interests."2 6 We view the exercise of this respon-
sibility as a complex undertaking not readily, if at all,
amenable to simple arithmetic calculations.
We have considered carefully the implications for
multiemployer bargaining of interim agreements ne-
gotiated during impasse and conclude that such
agreements may prevent significant unit fragmenta-
tion rather than cause it and do tend to facilitate the
breaking of impasse. Interim agreements of the type
deemed appropriate under our standards discussed
supra are calculated to further, not destroy, unit in-
tegrity inasmuch as they preserve a continuing mu-
tual interest by all employer-members in a final asso-
12 See Hi-Way Billboards. Inc, supra at 23
25 In examining the options available to employers. the Beck court and the
others noted herein were unable to consider the Board's recent decision in
Olympia Automobile Dealers Association, supra, where the Board recognized
that, even in the absence of a finding of fragmentation, a multiemployer
association has the nght to object to the negotiation of a separate. final
agreement between the union and an employer-member and can prevent the
defection of one of its members by filing a refusal-to-bargain charge with the
Board. This approach, rather than allowing the remaining employers to
withdraw from the association and thereby destroy group bargaining. stabi-
lizes group bargaining by allowing the association members to insist that
parties remain in the unit in accordance with their original commitment. See
also fn. 6, supra.
6 Buffalo Linen Supply Co., supra at 96.
ciationwide contract.2 7 The provisions of the Act
itself, rather than relative bargaining strengths, are
the determinative factors in assessing the legality of
particular forms of economic pressure.
In the instant case no interim agreements were
made or even attempted. Considering the facts as de-
scribed above in footnote 2, including the achieve-
ment of the multiemplover bargaining objective to
continue the method of driver pay on a wage basis,
and the supportive action that the lockout afforded
Respondent during the strike against it. we see no
reason to allow Respondent to withdraw from the
multiemployer unit in an untimely fashion. In the cir-
cumstances it is appropriate that Respondent execute
the contract ultimately achieved by the other unit
members. Accordingly. we hereby affirm the original
panel decision finding that Respondent violated Sec-
tion 8(a)(5) of the Act.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board hereby affirms as its Order the Order
heretofore entered in this proceeding on May 12.
1977 (229 NLRB 629).
7 This Is our response to) contentions that a unlon's negotiations of an
interim agreement is either tantamount" to rejection of the existence ol' a
multiemployer unit or a consent to withdrawal.
1097